REGARDING GST QUERY

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If a supplier has paid GST on a debit note treated as a sale, but the purchaser hasn't claimed the credit, a declaration from the purchaser can help resolve the issue. The purchaser can provide a letterhead declaration to the tax department stating they did not claim credit for the debit note. While this declaration can be crucial evidence, the department's decision to drop the case will depend on their review and any further verification.

Suresh S. Tejwani

Suresh S. Tejwani (Querist)
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02 November 2023 If the assessed has treated debit note as sale and already made payment in GSTR 3B and the purchaser has note claimed credit for such then can we submit declaration from purchaser in the department in their letterhead ? and by doing so case can be dropped by department ?

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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15 January 2024 QUESTION IS NOT CLEAR. What is the notice issued by the Dept here ?

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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10 July 2024 If there has been a treatment of a debit note as a sale by the supplier (assessee), which resulted in payment of tax in GSTR 3B, and the purchaser did not claim credit for such debit note, the situation can be addressed through a corrective process involving the tax department. Here’s how you can approach it:

1. **Declaration from Purchaser:**
- Yes, the purchaser can submit a declaration on their letterhead to the tax department explaining that they did not claim credit for the debit note treated as a sale by the supplier. The declaration should ideally include details such as the date of issuance of the debit note, the amount involved, and the reason why credit was not claimed.

2. **Submission to Tax Department:**
- The declaration should be submitted to the tax department where the assessment or scrutiny is taking place. It is advisable to submit this declaration as part of any communication or response requested by the tax authorities regarding the matter.

3. **Impact on Case Closure:**
- Whether the tax department accepts the declaration and considers dropping the case depends on the circumstances and evidence provided. The purchaser's declaration can be crucial evidence to support that no input tax credit (ITC) was claimed erroneously, thus justifying the non-taxability of the transaction from the purchaser's perspective.
- The department may review the details provided, possibly conduct further verification if necessary, and then make a decision on whether to drop the case or adjust the tax liability accordingly.

4. **Consultation with Tax Advisor:**
- It is advisable to consult with a tax advisor or chartered accountant who can assist in drafting the declaration and navigating the communication with the tax department effectively. They can ensure that all necessary details are included and that the submission aligns with the requirements of the tax laws and procedures.

In summary, submitting a declaration from the purchaser explaining the non-claim of credit for the debit note treated as a sale by the supplier can be a valid approach to resolve the issue with the tax department. However, the outcome will depend on the acceptance and decision of the tax authorities after reviewing the submitted information.

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